Capturing value in Australia

The sale of 77 King Street is in line with Keppel REIT’s aim to maximise and capture value

The sale of 77 King Street is in line with Keppel REIT’s aim to maximise and capture value

Keppel REIT has successfully divested its 100% interest in 77 King Street in Sydney, Australia, to ARE Noble, a wholly-owned subsidiary of Invesco Asia Core Fund for A$160 million or approximately S$160 million.

This resulted in a divestment gain of approximately A$28 million or S$28 million 1.

The sale price is approximately 40% above Keppel REIT’s original purchase price of A$116 million in end-2010 and an approximate 27% premium over the property’s latest valuation of A$126 million 2.

Ms Ng Hsueh Ling, CEO of Keppel REIT Management, said, “The strategic divestment of 77 King Street is in line with our commitment to maximise and capture value for Unitholders, while providing Keppel REIT with greater financial flexibility.”

The Manager intends to use the sale proceeds to repay existing debt, fund general corporate and working capital purposes and/or for future investment opportunities.

Strategically located in Sydney’s central business district, 77 King Street offers approximately 147,000 sf of net lettable area over 18 levels of offices and two basement levels of retail space.

The divestment of 77 King Street is not expected to have any material impact on Keppel REIT’s distribution per unit for the current financial year.

Following the divestment, Keppel REIT will continue to own four premium-grade office assets in Australia comprising 50% interests in 8 Chifley Square in Sydney, 275 George Street in Brisbane, the office tower and annexe at the Old Treasury Building site in Perth, 8 Exhibition Street and its two retail units, as well as a 100% interest in its three adjoining retail units in Melbourne.

The weighted average lease expiry of Keppel REIT’s Australian portfolio will be approximately 10 years, with an average age of five years.

1 Based on the exchange rate of A$1 = S$1 as at 14 January 2016

2 Valuation by Savills as at 31 July 2015